Utah Expands Taxation to Specified Services, Repeals and Creates Exemptions

Utah has enacted legislation with numerous sales tax changes, effective April 1, 2020 (unless noted otherwise below).

Per the legislation, Utah sales and use tax applies to the following services:

  • 900 service
  • Ancillary service associated with a 900 service
  • Amounts paid or charged for access to digital audio-visual works, digital audio works, digital books, or gaming services, including the streaming of or subscription for access to these items
  • Amounts paid or charged for the storage, use, or other consumption of prewritten computer software delivered electronically or by load and leave, or seller-hosted prewritten computer software
  • Security system monitoring
  • Personal transportation that originates and terminates in Utah
  • Parking or garaging a motor vehicle at a location that is designed and used for that purpose and is not a residential property
  • Tow truck service, including any related fees
  • Pet boarding or care
  • Pet grooming
  • Dating referral services
  • Identity theft protection

The legislation eliminates the sales and use tax exemptions for the following:

  • Sales of food and prepared food through vending machines
  • Cleaning or washing services for tangible personal property
  • Newspapers or newspaper subscriptions
  • Sales to a ski resort of electricity to operate a passenger ropeway
  • Sales or rentals of an unassisted amusement device
  • Admission to athletic events at an institution of higher education
  • The lease or use of a vehicle issued a temporary sports event registration certificate
  • Purchase of a list or database of names and addresses used to send direct mail
  • Sales to a public transit district
  • Sales of fuel to a common carrier that is a railroad for use in a locomotive engine
  • Sales of textbooks for higher education courses
  • Amounts paid to access a database
  • Sales of cleaning or washing a vehicle, unless it includes cleaning the interior of the vehicle

The sales and use tax exemption for construction materials used in the construction of a life science research and development facility will be repealed on January 1, 2027.

Many retailers who historically have sold items and services not subject to Utah sales and use tax, or have relied on exemptions which will no longer be in force, will find that they are now required to establish new or updated Utah calculation, collection and remittance procedures to accommodate these new changes.

The legislation creates sales and use tax exemptions for the following:

  • Menstrual products
  • If paid for through a machine that only accepts cash for payment: Sales of cleaning and washing services of tangible personal property; Sales of food, food ingredients or prepared food if the proceeds of each sale do note exceed $1.00, and; Sales or rentals of the right to use or operate an unassisted amusement device
  • Amounts paid for tangible personal property that is not electricity, gas, machinery, equipment, vehicles, parts, office equipment, or office supplies and is consumed in the repair of tangible personal property, assisted cleaning services and hotel accommodations.

The legislation expands the definition of “purchase price” to include installation charges and delivery charges.

The legislation increases the sales tax rate applicable to food and food ingredients to 4.85% (previously 1.75%). (S.B. 2001B, Laws 2019, effective April 1, 2020)

Posted on January 13, 2020